Today's markets: Shares slide as ‘Tariff Man’ keeps his word

Stocks are plummeting this morning as investors reacted to President Donald Trump’s tariffs. It's less of a negotiating tactic than a sledgehammer.

Europe’s main bourses were also sharply lower at the open. The FTSE 100 is down 1.3 per cent, while in Frankfurt the Dax slid 2 per cent. Both had been at record highs, though. Shares in Paris are down 1.85 per cent. Asian shares led a broad selloff overnight as US futures also sank after the president put 25 per cent on goods from Mexico and Canada. Tokyo and Seoul both fell 3 per cent before paring losses to close 2.8 per cent and 2.5 per cent lower respectively. To see how individual companies have been impacted by the news, click here. 

In the US, Nasdaq 100 futures were off about 2 per cent. The dollar firmed up a lot on the tariffs. The dollar index rallied close to 110 as China’s yuan sank to almost its lowest ever and the Canadian dollar hit a 22-year low. The euro also skidded lower as markets don’t think this is the end of things. Trump said that tariffs on EU goods “will definitely happen”, while he might be able to work something out for the UK.

The question is whether this is the beginning of a damaging trade war or something less sinister. In addition to the 25 per cent tariffs on its nearest trading neighbours, the US is also imposing 10 per cent tariffs on goods from China. It seems from the selling pressure that the market underestimated Trump – not for the first time. But whether this is resolved in short order or drags out and spirals is unknown. If the tariffs stay in place it would mean a significant redrawing of trade terms and currencies will need to adjust to reflect that. Trump is due to speak to the leaders of Canada and Mexico today – a sliver of hope, perhaps?

Whether or not you think tariffs are dumb and that Trump was elected as ‘Tariff Man’, you would still have to think that the policy will push up inflation in the US, even if currency fluctuations soften the blow. And this could be important for the Federal Reserve. Retaliation and escalation will be the key now – Trump has played a card and has more. We don’t know exactly how many cards other countries have. Canada retaliated with 25 per cent tariffs of its own on C$155bn worth of US goods. But we need to see this in the round. Tariffs are only one part of the agenda. Panama said it would renew China’s Belt and Road Initiative after Sec of State Marco Rubio made Panama his first overseas visit.

The Bank of England is expected to cut rates this week as it contends with stagflation. The growth outlook is miserable but inflation is picking up, which makes it a difficult decision for the Monetary Policy Committee. Flash PMI data, which the BoE likes to look at, showed prices charged by private sector firms rising at the fastest pace in 18 months. At the same time, jobs are being cut at the fastest pace since 2021. Still, the FTSE 100 hit a record high last week and had a good January, up about 6 per cent. If tariffs stick I wonder if we've already seen the best of 2025.

Elsewhere, jobs data at the end of the week is the highlight from the US. Earnings season continues apace with Palantir (PLTR) today and Alphabet (GOOGL), Disney (DIS) and more. Watch for what the earnings calls are like for Qualcomm (QCOM) and Arm Holdings (ARM) in the wake of the DeepSeek news last week.

For everything else you need to know this week, click here.

By Neil Wilson, an analyst at TipRanks